ECB's Praet says in the end, countries must adjust

FRANKFURT, Oct 10 (Reuters) - The European Central Bankcannot solve the euro zone's debt problems and it is rather upto the bloc's member states to adapt and get their budgets onsolid ground, ECB policymaker Peter Praet said.

Speaking as part of a panel discussion at a cash paymentsymposium organised by Germany's Bundesbank, Praet said the ECBhad to tread a fine line between making its monetary policy workand taking incentives away for countries to reform.

"At the end of the day, societies have to adjust," Praetsaid, adding that monetary policy cannot solve the euro zone'sproblems.

The ECB last month launched a new programme to buyshort-term bonds of debt-strained euro zone countries to helplower their borrowing costs in return to firm reform commitmentsand to ensure that its record-low interest rates reachhouseholds and companies.

The move has sparked harsh criticism especially in Germany.The Bundesbank was the only one not to vote in favour of themove and Germany's leading economic institutes warned theprogramme could lead to higher inflation.

Praet acknowledged criticism for the ECB's latest decision,but said there was "no easy way" to address the problem offragmentation, the fact that the ECB's interest rates don'tfilter through evenly in the euro zone.

(Reporting by Eva Kuehnen and Sakari Suoninen)

((sakari.suoninen@thomsonreuters.com)(+49 69 7565 1267)(ReutersMessaging: sakari.suoninen.thomsonreuters.com@reuters.net))

Keywords: ECB/PRAET